business essay

Value of HRM to Business Organisations

Published: 23, March 2015

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Human Resource Management

1.1 Introduction

The competitive climate of today means organisations are "dependent upon attracting, recruiting and retaining quality people" (Cooper et al, 2003, p.11). Recruitment and selection is integral to this and as a result organisations need to recognise the "pivotal role selection plays in the overall human resources strategy" (Roberts, 1997, p.27).

Selection of the right candidate is essential to the success of a company (Cooper et al, 2003). Therefore, it is vital that human resource managers have the correct selection processes in place. Companies utilise various techniques including interviews, assessment centres, application forms and psychometric testing. The literature review will focus on a specific method of selection; personality testing.

1.2 Historical context

Barrick et al. (2001) categorise the history of personality testing into two distinct phases; the first ranging from the 1900's through to the 1980's and the 1980's onwards. Throughout the first phase personality testing was largely dismissed due to a number of psychologists questioning the actual existence of personality (Cook, 2004). According to Cook (2004) a major reason for this was the view maintained by Mischel that "behaviour wasn't consistent enough to make general statements about personality meaningful" (p.134).

In 1965, Guion and Guttier concluded that they could not "advocate, with a clear conscience, the use of personality measures. . .as a basis for making employment decisions about people" (p.160). Morgeson et al. (2007a) state that this view championed by Guion and Guttier prevailed for over 25 years but was contested in 1991 when two meta-analyses assessed "the validity of personality tests for personnel selection" (p.60). Although these publications, one by Barrick and Mount (1991), the other by Tett et al. (1991) provided significantly different results, both studies demonstrated that "personality measures should once again be used in selection contexts" (Morgeson et al, 2007a, p.684). This sparked a new era for personality testing.

1.2 Application of Personality Testing

As Rothstein and Goffin (2006) note personality testing is used by human resource professionals to evaluate job applicants. The tests are intended to "gauge the innate traits and characteristics of people" (Cooper et al, 2003, p.11) with the aim to ascertain whether the applicant has the right personality for the job, whether they will be able to do the job and how they will behave in the role (Cook, 2004). Theory states that there are many different personality traits, known as facets or factors (Hastings & O'Neill, 2009) which can be measured by personality tests.

According to Cook (2004) there are a number of different ways to measure and assess personality in a selection context including:

Observation

Situational/Behavioural tests

Ratings, references

Questionnaire/Inventory

Projective Tests

Laboratory/physiological tests

Biodata and WABs

Perhaps the most prevalent method is the personality inventory, more commonly known as a personality test. The results of personality tests are meaningless unless they can be compared to a population (Cook, 2004). Therefore, the major UK inventories have "normative data based on large representative cross-sections of the general population" (Cook, 2004, p.136). An example of a globally used personality test is Cattell's 16PF questionnaire. It is popular as it measures 16 smaller individual facets in addition to the Big Five (Grucza & Goldberg, 2007). However, as Kline (1992) notes it would be impossible to list all the various personality tests that could be used in selection.

1.2.1 The Big Five (FFM)

Tett and Christiansesn (2007) suggest a major reason for the increase in the usage of personality testing is the advent of the five-factor model. The big five framework concentrates on the following traits:

Neuroticism

Extraversion

Openness

Agreeableness

Conscientiousness (Goodstein & Lanyon, 1999)

Goodstein and Lanyon (1999) promote the use of the five factor approach in companies and establish that it is "a useful key to understanding human personality, at least on the direct, pragmatic level that is required in the workplace" (Goodstein & Lanyon, 1999, p.294).

Goffin and Rothstein (2006) highlight that studies based on personality tests and the Big Five are extremely valuable for human resource management. Barrick and Mount's (1991) study which focused on the relationship between the Big Five personality dimensions and job performance criteria found that Conscientiousness was the most consistent predictor of job success. Conversely, Tett et al. (1991) suggested that Agreeableness was the stronger predictor. However, as Goodstein and Lanyon (1999) note both studies "confirmed the usefulness of using the Big Five as predictors of on-the-job performance" (p.296).

1.2.2 Why do organisations use personality tests?

One of the most prevalent reasons given by HRM Professionals for using personality testing is the fact that it can improve employee fit and reduce turnover rates by as much as 70% (Goffin & Rothstein, 2006). Ones et al. (2007) reflect a similar view acknowledging that personality tests can be:

Being able to predict future behaviour such as "the likelihood that applicants. . .will be motivated to perform, and will develop into leaders" (Goffin & Rothstein, 2006, p. ) can have numerous benefits for the organisation.

Both of the views presented above demonstrate the importance of HR practices and in particular the significance the correct selection method can have on the success of an organisation.

1.3 Recent debate surrounding personality testing

Despite the controversy surrounding personality testing, Tett and Christiansesn (2007) ascertain that personality testing has been growing in popularity for over 20 years. This is reiterated by Rothstein and Goffin (2006) who refer to the 2005 survey by Fauder which revealed that all the top 100 companies in Great Britain utilised personality tests as part of their selection process.

1.3.1 Validity

A major debate surrounding personality testing is the validity of the tests. Kapplan and Saccuzzo (2000) define validity "as the agreement between a test score or measure and the quality it is believed to measure" (p.135).

Recently Morgeson et al. (2007b) documented that the use of personality testing in selection contexts should be reconsidered due to considerable evidence which demonstrates low validity, "often close to zero" (p.1046). Referirng to Barrick and Mount's study, Morgeson et al. (2007a) show that the highest validity for personality testing is .13. They proceed to suggest that previous research which has found high validity has resulted from weak methodologies and widespread corrections (Morgeson et al, 2007a). In contrast, Tett and Christiansen (2007) refute this view suggesting that "validity is still sufficiently strong to warrant personality test use in hiring" (p.967).

1.3.2 Faking

Roberts (1997) highlights that one area of particular concern with regard to personality tests is the degree to which responses might be faked. It has been suggested that people may answer in a way that they believe will "maximise their chances of getting the job" (Cook, 2004, p.160) rather than their honest answer. Dale (year Christina??) maintains that "in reality, there is no right or wrong personality. . .but the use of profiles and norms can mislead us into believing that there is an 'ideal' model'"(p. ???) which may lead to faking. One particular study carried out by Viswesvaran and Ones (1998) investigated whether people can fake their responses to personality tests if asked to do so. The study found that all the big five factors of personality can be improved by faking which raises serious questions over the use of personality tests as a viable selection tool (Viswesvaran & Ones, 1998).

The opposing opinion presents a more optimistic view asserting that in real life situations the vast majority of applicants do not fake their responses (Roberts, 1997). Rothstein and Goffin (2006) suggest "the effects of faking are unlikely to be severe enough to neutralize the usefulness of personality tests" (p.171). Conversely, a study undertaken by Rosse et al. (1998) found that the faking of personality tests had a "statistically and practically significant effect on who is hired" (p.640). Rosse et al. demonstrate that "faking may have a pronounced impact on selection decisions" (Morgeson et al. , 2007a, p.686) and confirms Roberts (1997) view that there is much debate over the actual presence of faking in selection.

1.3.3 Internet

Stanton (1999) suggests that the Internet holds great promise for personality testing in personnel selection. Internet personality tests may help reduce printing costs and costs of paying human proctors, allow the administration of tests worldwide 24/7 and provide instantaneous access to results (Rothstein & Goffin, 2006). However, various problems have been highlighted such as test security and issues with confirming the identity of the person taking the test (Rothstein & Goffin, 2006).

1.4 Conclusion

The literature has revealed the use of personality testing is not without controversy and there is no definitive answer as to whether it should play an important role in the selection process. This may prove problematic for HRM practitioners when considering whether to implement personality testing into their selection policies. One major issue that the literature has highlighted is that although a number of meta-analyses state that personality testing is a good predictor of job performance, there is little information over "the incremental validity of personality measures over other predictors of job performance" (Goffin & Rothstein, 2006, p.160). In other words, it is unclear what function personality testing should have in relation to other selection methods.

Some of the issues surrounding personality testing have been outlined in this review but with a number of researchers demanding that further research is conducted there is still a great deal to learn about personality testing in selection before a consensus can be reached over what role it should play in selection.

Section 2: Case Study Description

Two empirical papers were identified that present research findings on personality testing in a selection context. The first paper entitled 'A survey of assessor beliefs and practices related to faking' by Robie et al. (2006) (see appendix 1) considers assessor's perceptions and beliefs about faking when using personality testing in a selection environment. The second paper 'Internet-based Personality Testing: Equivalence of Measures and Assesses' Perceptions and Reactions' by Salgado and Moscoso (2003) (see appendix 2) examines the Internet based personality test in relation to its paper-and pencil counterpart.

Robie el al. (2006) examine assessor's views on faking in order to obtain information concerning the detection and prevention of faking. The research considers whether faking is a problem, what factors affect faking, what is used to identify faking and what is done when assessors think the candidate has faked.

A web based survey was utilised to collect data. Seventy seven surveys were completed (48% response rate) by lead assessors who had worked on individual assessments at a large international consulting firm.

The authors found that the assessors unequivocally believe that faking is a problem in selection yet despite this they also stress that faking does not affect the overall assessment of a candidate. With regard to what factors affect faking the main reason highlighted was that people want to present themselves in the best possible light. Furthermore, the authors identified that for assessors the most predictive indicator of faking is believed to be anomalies in certain components of the data in comparison with other areas of the assessment process. In order to counteract faking, Robie et al. (2006) discover that the most favoured technique is to have less weighting on the personality scores and toÂ "triangulate evidence from the various assessment methods" (Robie et al, 2006, p.675).

The paper concludes that although assessors believe they can detect faking it is unlikely that this is the case. This may prove problematic as misconceptions about assessor's abilities to detect faking may lead companies to believe that they are already providing a fake proof assessment, and hence will fail to develop more effective measures. Therefore, Robie et al. (2006) establish that companies should test assessor's skills in recognising faking whilst also developing new and improved methods that detect faking.

The second paper by Salgado and Moscoso (2003) explores the new phenomenon of Internet based personality testing in contrast with the traditional paper-and-pencil version. The paper has three main objectives:

To examine the equivalence of Internet based and paper and pencil versions of a FFM-based personality questionnaire.

To explore the perceptions and reactions of the examinees to the Internet-based personality questionnaire.

Analysing the relationship between the individual's personality and the reactions to the two versions of the questionnaire.

Two different studies are undertaken. The first study sampled 162 undergraduate students from a Spanish University. A personality questionnaire developed under the five factor model (FFM) was distributed to participants in both paper and pencil form and in web based form with a 3 week separation period in-between.

The results from study one revealed that both formats of the test can be used interchangeably without "significant changes in the psychometric properties" (Salgado & Moscoso, 2003, p.199). The results also disproved previous research which had identified that greater inter-correlation among the Big Five was a possible disadvantage of Internet tests.

The second study sampled the 123 undergraduates who participated in the first study and 42 managers who had several years of work experience. All undertook the web based personality questionnaire. Participants completed a separate questionnaire approximately 3 weeks later, to ascertain their perceptions and reactions to the Internet based personality tests in comparison to the pencil and paper version.

Study two reveals that the Internet test was perceived in equal or higher regard than the paper and pencil version. As Salagdo and Moscoso (2003) notes this is particularly significant as it demonstrates that candidates prefer Internet tests and as a consequence they also believe it is better for the organisation. The authors also noted that some of the participants felt that Internet-based personality testing was more difficult to fake.

In conclusion, Salgado and Moscoso (2003) found that the paper-and-pencil personality tests can be converted to the Internet without any loss of psychometric properties, the Internet test is often better perceived than its counterpart and individuals prefer the Internet test. A final point made by Salgado and Moscoso (2003) is one of caution, surrounding the transference of findings from personality testing to other forms of selection procedure. They note that although the findings in the study firmly support the use of the Internet in personality testing, this does by no means guarantee that other selection tests such as cognitive testing will demonstrate the same findings.

Section 3: Independent Analysis

Considering sections 1 and 2, and comparing and contrasting the two, conduct and present your own independent and critical analysis of the empirical case material and what it tells us about the value of HRM and HRM theory to business organizations. Where you draw from other sources for information and ideas, you should, as usual, clearly reference these sources. (35 marks)

â€¢ Analyze relevance of HRM theory (section 1) to business use of HRM practices (section 2)

The empirical papers identified above consider various aspects of personality testing in selection. The theory and debate referred to in the literature review seems to be echoed by the papers, however, there are some areas of discrepancy. The papers and literature also highlight a number of factors that demonstrate the significance of HRM in business organisations.

Firstly, it is important to note that a significant limitation to both studies is that their research is not conclusive. Both studies highlight the need for further investigation to be conducted.

With regards to the Salgado and Moscoso study, a major limitation is that it was undertaken in Spain which may reduce the worldwide validity of the findings. However, the sample size and age range covered are significant which allows for strong conclusions to be deduced. Another issue relevant to study one that may have had an adverse effect on the results is that the participants were not applying for a real job. However, as noted in the study there was an attempt to rectify this by stating that the results would be used for selecting participants to go on an assessment centre training course.

Theory identifies that recruitment and selection should widen the net and capitalize on technology (Cooper & Locke, 2000). The study conducted by Salgado and Moscoso supports this theory as it shows that Internet based personality testing will allow companies to continue to develop their selection methods by embracing technology. It may also be deduced from the paper that Internet based personality testing allows for more people to be tested. This is supported by Rothstein and Goffin (2006) who note that Internet personality testing allows organisations to assess the personality of suitable candidates regardless of where they are in the world. Therefore, it can be assumed that Internet personality testing fulfils the aims of recruitment and selection.

Although it has been stated that the finding of Salgado and Moscoso (2003) cannot be transferred or generalised in relation to cognitive testing it would be an interesting direction for future research, as potentially the entire selection process could then be completed online. Betram (2006) suggests that by 2010 technological advances will allow applicants to be interviewed in the comfort of their own home which would mean virtually the whole selection process is conducted digitally.

As shown in the literature review faking is a major stumbling block for personality tests. Roberts (1997) theorised that faking was often not a problem in real life personality testing. Robie et al. (2006) challenge Roberts (1997) view as they note that the assessors perceived faking to be a problem in the assessment process. Their research supports Cook's (2004) argument that people fake in order to maximise their chances of getting the job. However, it could be suggested that other selection methods are prone to faking. As Redman and Wilkinson (2006) suggest

"candidates will attempt to create and maintain a particular impression of themselvesÂ Â Â which coincides with what they believe the assessor is looking for. Thus, to some extent at least, the assessor only sees what the target person wants them to see" (p78)

In other words, applicants may be able to put up a facade throughout the whole selection process. For example, it is likely that candidates will be on their best behaviour at interviews or may embellish their achievements on application forms.

Interestingly, Salgado and Moscoso's paper also referred to faking and identified that some participants felt that Internet personality tests were less susceptible to faking. Arguably, a completely different assumption could be made that Internet tests are actually more vulnerable to being faked. A reason for this could be that a lack of surveillance during testing may mean the temptation, likeliness and ease at which one could fake through aid of others and/or researching possible "correct" answers may well increase (Rothstein & Goffin, 2006).

This demonstrates that there is a gap between the literature and actual business practice. Billsberry who states there is a 'disjunction between recruitment and selection literature and managerial practice. '[1] Billsberry's argument is important to consider when examining the selection processes. It is important to note that Salgado and Moscoso only asked one question with regard to faking.

Robie et al. (2006) identify that the greatest tool available to an assessor in order to combat faking is manipulation of the 'weighting' of competencies. It could be suggested that if an Internet based personality test was to be used such as the one considered by Salgado and Moscoso, the Internet format would allow weighting manipulation of questions to become a much easier and time efficient process, further allowing a company to match varying personality traits to varying workplace roles.

Although Salgado and Moscoso mainly identify advantages of using Internet based personality testing it may be important to consider what problems could occur. When a company makes the business decision to utilise any selection method they must ensure it does not exclude anyone from applying. It could be suggested that Internet based personality has the potential to directly exclude minority groups. For example, Redman and Wilkinson (2006) cite an incident where 53 workers lost their jobs after a company restructured their aptitude tests and "did not effectively take into account cultural differences" (p.363). This is equally relevant to the use of Internet personality testing, as potential employees who are less technologically aware, for example older people, may feel discouraged from submitting an application.

The issue of ensuring certain minority groups are not excluded highlights the importance of HRM to business organisations as it not only suggests that good selection techniques must be in place to ensure businesses do not miss out on employing the best candidate, it also demonstrates that all areas of HRM must complement each other if organisations are to succeed. It is essential that HRM policies and practices link together throughout a company. The issue of exclusion illustrates that diversity policies should be in place across the whole business. Similarly, Robie et al. comment on the significance of properly training assessors which again links selection practices with training and development policies. All areas of HRM can impact on selection so it is essential there is standardisation throughout. Therefore, it is vital that there is not a gap between HRM theory and actual practice.

Selection is also a two way process. Internet based personality tests allows for this??

"Over the years, researchers have suggested many HRM practices that have the potential to improve and sustain organizational performance. These practices include emphasis on employee selection based on fit with the company's culture" - personality testing allows for this

In conclusion, both the literature and empirical papers demonstrate that HR managers must be wary when utilising personality testing in selection due to the debate surrounding their use. Despite the lack of agreement on personality testing, a number of theoretical advantages have been identified which have been found to exist in practice which shows the value of HRM theory to business organisations.

Â Arguably, there are many theoretical advantages of personality testing that have been found to exist in practice, identifying the value of HRM theory to business organisations. In summary, it is evident that personality testing is a valuable technique for selection which signifies the importance of HRM.

So much research on personality testing, must be pretty important to people but needs to be used in conjunction with other selection methods to find the best candidate for the job.

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